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Auto industry begging a tow

The report, yesterday,’ focused on the revelation that as at 2016, 49 auto manufacturing licences had been issued by the authorities with only 25 factories having commenced operations in the country. In this concluding part, the report examines the country’s car manufacturing capacity and how much is being spent on importation of the product by Nigerians.

  1. Agwu, who has over 20 years experience in organising auto fairs in Nigeria further stated: “Government should do all within it powers to ensure that those companies that have already invested in their assembly plant survive. They should be supported in different ways by giving them zero tariffs from three to five years within which they would have achieved certain percentage of their parts being locally produced based on what they agree with the government.

According to him the solution to our auto plants challenges does not lie in just marshalling out policies, government have a serious work and role to perform to see to the survival of assembly plants in Nigeria.

Former NADDC DG, Aminu Jalal with Jacky Hathiramani…Kia MD and Ifeanyi Agwu, BKG Exhibitions MD

“The issue of power should be solved. This does not only affect the auto sector but every single human effort in the country. Lack of power supply makes manufacturing a nightmare in “Nigeria. If they are not paying lip service to the development of the nation’s economy, fixing the energy sector should be the first step. If there is no national financing scheme for automobile in the country, the assembly plants would not survive. Regional African markets should be opened up to our assembly plants through government collaboration.

“We are not a student of forced government patronage because it has been done in the past; it will only make the company not competitive enough in the open market which is the real market. But when they are given adequate incentives, they are able to improve and compete favorably with their counterparts both within the country and other parts of Africa.”

For Mr. Ibrahim Boyi, Managing Director of Peugeot Automobile Nigeria Ltd, the Federal Government has not given the auto policy the desired push to enable it attain the set goals of developing the nation’s automobile industry.

According to him, the policy itself was well thought-out but the implementation is the problem. “For us in PAN, we believe in the policy because it is the key enabler for local assemblers to survive and attraction for others to come in,” he said.

For it to work therefore, he suggested that it should be taken very seriously. “Government should ensure the right levy is imposed to discourage importation of used cars into the country and strengthen the control of the nation’s borders. It should also ensure that duty payment is linked to vehicle registration. Patronage of products from the local assemblers by the government and its agencies, must be taken very seriously as well,” he said.

The other area he wanted government to look into is finance scheme by government for workers so that they can be empowered to purchase the vehicles produced by the local assembly plants.

“Government should ensure finance scheme for workers to enable them access cheap locally assembled vehicles. They should also ensure the setting up of auto industrial cluster development where spare parts manufacturing companies would be located in a cluster close to the auto manufacturing

companies. “There is the issue of standardisation for test laboratory. The National Automobile Design and Development Council, NADDC and Standard Organisation of Nigeria, SON, should set up support for the local industry too,” he said, adding that all these keys elements should be put together and simultaneously too to get the best out of the policy.

“The policy itself is well thought-out but the implementation  is the problem; you see all these elements listed are supposed to go together. At  the moment levy on used car is not implemented, so also is linkage of duty and licensing. Vehicle finance scheme too is yet to be put in place, while some government agencies are still buying vehicles from outside the locally assembled vehicles.

“For some who have keyed into the policy, we feel that we are being short-changed because the government is yet to comply with the patronage of the policy”.

According to him, when you look at the incentive accruing  from the scheme, you see that the present structure does not accelerate industrialisation. There is nothing that say you cannot remain at SKD level. He argued that government should have created sufficient gap between the SKD and the CKD to encourage auto companies to move to the CKD level which is what would promote industrialisation.

Sufficient incentives

“It is the CKD that would quicken the level of industrialisation. It will create jobs and drive the desired development in the nation’s auto industry,” he said.

Regretting that three years after, no local assembler had moved to CKD level, he suggested that wheel operators at CKD level should enjoy zero duty, while SKD should attract 25 per cent duty. This,  he said, would create sufficient incentives for assemblers to move to CKD in no time.

According to him: “No manufacturer has moved to CKD level. The level of disparity has not encouraged investors to move to accordingly. In SKD, you are not creating many jobs and also not in a position to develop the local components as most of the cars come complete. It is simply an easy way for investors to make money.”

He pointed out that if government has been very strict and serious as regards  the policy, “we would have gone far because our products are good enough to compete with any one from abroad”.

Tokunbo (used) vehicles at the Apapa port…buyers nowhere in sight

On the appointment of a new helmsman to oversee the NADDC, he said it was a perfect choice, but has a few words of advice for him. “My advice to the new Director General of NADDC is for him to take another look at the policy with a view to re-framing it to ensure that it can achieve its desired goals.

“He should ensure that all the levers of the policy are pushed forward simultaneously. The policy needed to be fine-tuned to accelerate the development of the industry,”he said.

He, however, commended government for the new pronouncement on patronage of locally made products which include auto products. “We are happy with the pronouncement because it will create demand, scale (size) which would create efficiency.

“I believe it can be enforced because government has instrument to encourage the organisations to do so,” he said, adding that such a pronouncement was made in the past without result, “but there is encouraging improvement with the present government,” he said.

Only recently the Chairman, Steering Committee of  Association of Luxury Bus Owners of Nigeria, ALBON, and Association of Mass Transit Operators of Nigeria, AMTO, Sir Dan Okemuo regretted  that the high interest rate and rise in foreign exchange rate have resulted in high cost of imported buses such that today landing cost of one luxury bus is about N125 million from N85 million and the cost of Toyota Mini-bus is now over N27 million from N14 million two years ago.


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